• Advertising Age, Tuesday, August 15, 2006 10:45 AM

Sharp sales declines among the big casual-dining chains in the $331 billion restaurant industry have analysts and marketers worried. Analysts are questioning whether the slide is a response to escalating consumer energy costs and rising interest rates or a long-term trend. The slump in second-quarter business is the worst since 1991. Although restaurants represent only 4 percent to 6 percent of consumer disposable income, restaurant patronage is viewed as a leading economic indicator. Casual-dining chains reported a 0.2 percent decline in same-store sales during the second quarter, while quick-service chains reported a 1.8 percent gain, according to John Glass, restaurant analyst for CIBC World Markets. Fast-food chains such as McDonald's are holding their own, but casual-dining leader Applebee's said 5 percent of its customers can't afford to eat there on incomes below $35,000.

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